The Aftermath of Boohoo’s Acquisitions
Boohoo is unstoppable. The UK-based online fashion retailer has seen soaring sales and share prices over the past year, catering to a younger demographic with its relatively low prices and on-trend collections. Known as ultra-fast fashion, their business hinges upon the “test and repeat” model, which meant market-testing a wide range of items on its site and reordering products that sell best.
By manufacturing half of its products in the UK, the firm says it can offer typical turnaround times for new styles of about four to six weeks. If that was not enough, the acquisition of UK label PrettyLittleThing in December 2016 followed by almost-defunct LA-based Nasty Gal just two months after signified the umbrella brand’s dominance in the youth market.
While some acquisitions may be questionable, Boohoo’s move was a stroke of genius as group profits doubled and operating profits rose 101% from £15m to £30.3m in 2017.
Source: WebFG – 25th April, 2018
Let’s take a closer look at these acquisitions and how far they have come.
Same Same But Different
One thing that Boohoo, PrettyLittleThing and Nasty Gal had in common were dresses seemed to reign supreme as a best-selling category. While all three brands focused on the “millennial & beyond” crowd, each of their styles, however, were far from identical.
Source: Boohoo’s collection on shopprapp.com
Boohoo retained a stronghold on fairly provocative, “out there” styles, featuring clubbing-esque bodycon dresses that fits like second skin. When they acquired PrettyLittleThing, it boosted their sexy collection from a ‘grinding at a club’ vibe to ‘partying in style’, aimed at the Kylie Jenner wannabes with lots of lace thrown in the mix (shown below).
Source: PrettyLittleThing’s collection on shopprapp.com
Their name might suggest differently but Nasty Gal had always been popular with cool and edgy styles with a touch of bohemian rhapsody thrown in the mix. And it remained so, even after Boohoo’s intervention.
Source: Nasty Gal’s collection on shopprapp.com
Nevertheless, it’s important to note that Boohoo, PrettyLittleThing and Nasty Gal are three separate identities for three different young women.
Joint Chief Executive Carol Kane told Drapers Online, “Boohoo is striving to keep the identities of its three brands separate so as not to confuse customers.”
Off The Charts Potential
And they have done well so far, with Boohoo’s revenue increasing by 51% in 2017 to about $321 million, while profits surged 97% to $40 million. What does data say about the performances for all three brands over the past 8 months from August 01, 2017 – March 31, 2018?
Looks promising, doesn’t it? From the bar chart above, we can deduce that:
All three brands had rather similar and above average sellout and replenishment rates, in accordance to their number of SKUs.
Boohoo had the best performance as they sold out 66.7% of 60,699 SKUs.
PrettyLittleThing had the highest replenishment rate, indicating that they were selling well and required constant restocking of style, sizes or colours.
Having said all that, did the trio resort to rampant discounting practices?
Not at all. PrettyLittleThing seemed to be sitting prettily above the other two brands with the lowest percentage of discounted SKUs that were sold out. This could mean they are meeting the needs of their target customers, hence were able to sell out without needing extensive promotions. The chart below will further prove how insignificant their discounting practices were.
Only a meager amount of PrettyLittleThing SKUs were discounted in the 60-64% range. On the other hand, while Boohoo seemed to cover a wide discount bracket, a majority was at the low 20-24% range. Certainly not too shabby for a retailer who just acquired two popular brands in two months and have over 50,000 products under their belt.
However, the test was primarily in Nasty Gal that was bankrupt at the point of acquisition.
Revival of Nasty Gal
From the charts above, even though they did sell a decent percentage of SKUs, they also sold 47.3% of those SKUs at a high discount range of 40-44%. However, this is considered a far cry from their prior destitution and a victory for Boohoo.
“It represents an exciting opportunity to accelerate our international offering and inspire an ever-growing range of young customers in the US and around the world,” said joint CEOS of Boohoo, Kane and Mahmud Kamani.
The failure of Nasty Gal was entwined in production, planning and logistics but the tables seemed to have turned for the better with above average sellouts as shown earlier. Boohoo is a misnomer in this case, because certainly their current success is no reason to cry. For now, at least.
Thinking of acquiring or growing your acquired brands? Drop us an email at email@example.com and we’ll be in touch!
You might also like
Operational Excellence: Store Reopening Strategies Post Covid-19
Nearly five months on from the global spread of Covid-19, lockdowns are finally being eased and stores are reopening. Most countries in Asia as well as Italy, the UK and US are now gearing up to ignite economic engines again. The impact of Covid-19 on retail has been tremendous. After months of strict lockdowns, brands […]
Where Does Black Friday Fit into the New Fashion Calendar?
With the fashion industry lobbying for change in seasonality, what will happen to Black Friday? It’s around this time of the year that fashion buyers and merchandisers will normally start preparing for the retail phenomenon, the annual event that has trained consumers to expect price slashes and spawned a discount culture that the industry has […]
Post-Pandemic Retail: Shifting The Fashion Calendar
In the past few months, the fashion industry has been forced to reconcile with deep-rooted, systemic issues that have troubled the industry for decades. While stores are slowly beginning to reopen and some of us return to work, for many a clear vision of the post-pandemic retail landscape is hard to picture during current uncertainty. […]
Taking a Leaf Out of Asia’s E-Commerce Model with Natalie Lee and Giulio Xiloyannis
The Asian e-commerce landscape is rapidly recovering from the effects of Covid-19, an outlier which generated interest from global businesses. Brands and retailers are keen on penetrating the online space in the region, but doing so requires a different approach than in the West. In our recent webinar hosted by Simon Collins, the co-founder of […]
Digital Revolution: Key Lessons from the Crisis and How Fashion Can Navigate the Next Normal
The fashion industry is no longer what it once was. Covid-19 has reshaped the entire retail landscape, as consumer priorities quickly shifted. It has transformed every step of the value chain, from where the products are sold to how they are marketed and delivered to customers. This leaves fashion companies with no choice but to […]
What Bridal Retail Looks Like in the Aftermath of Covid-19
This year’s wedding season is a washout. With bans on large gatherings in place to contain Covid-19, the summer wedding season has been pushed to later in the year and possibly even into next spring. Fashion is a major stakeholder of the wedding industry – bridal retail is worth an estimated $300 billion globally. Uncertainty […]